Tuesday, July 17, 2012

Product Competition and U.S. Politics

I have been thinking in recent years about marketing consumer goods and politics. My theory says that competing products on the consumer marketplace which are most similar and which differ very little in quality or substance are the very products that are marketed most aggressively. Ad campaigns for things like soft drinks, local auto dealerships or domestic beers for example are presented in a way to make the consumer believe that one of these products is far superior and beyond comparison to the other product of its type. Coke and Pepsi come to mind. They are practically indistinguishable from one another, made of largely identical ingredients. Yet based on the intensity of their marketing efforts, either company would have us believe that the other product tastes radically different and is entirely inferior.

There is no shortage of examples of this. Auto dealerships for example are merciless on the local news broadcasts of most major metropolitan areas. To hear them tell it, buying a Toyota at ABC dealer is a recipe for disaster and you're going to save hundreds if not thousands at XYZ Toyota showroom on the other side of town. But the truth is both businesses are working from the same supplier and paying the same price to the manufacturer. Their labor market and overhead are nearly identical, being in the same metro area so there can't be any discernible difference between the price you get at one rather than the other besides a difference based on random chance.

And there are other products whose peddlers spend what must be tens of millions a year to get us to buy a different brand but nearly identical product. The truth is, these extensively and incessantly marketed goods are extremely limited in the variety of choice they can offer the consumer. In addition to centralization and uniform manufacturing processes, there are state regulations on what can and cannot go into a product, what it can be called, etc. that force competitors to offer a product under different brands that are essentially no different from one another.

But perhaps the most exaggerated example is with American politics. In recent years the Democratic and Republican parties have been trying to sell themselves to voters as radically different in their philosophies and budget priorities and attitudes toward everything from health care to crime and immigration.

But the truth is, rhetoric aside neither of them has instituted any policies that are much different from the other. Neither of them, for example will drastically reduce entitlement spending. They may quibble about miniscule government spending on the margins such as educational or job training programs but these arguments are meaningless when viewed against the real threat to American fiscal health: Social Security and the Medicare/Medicaid programs.

As an example, welfare payments to the poor were curtailed under Democratic president, Bill Clinton. Conversely, medicare payments were expanded under Republican, George W. Bush. Yet both the Democratic and Republican parties would have you believe that only the opposing party would do something like that.

Both parties have their outliers, of course. But I suspect that if we took a random sample of legislation and asked American voters to identify which party sponsored or initiated the law, very few of us could (beyond blind chance) determine whether it was a Democrat or a Republican who was behind the bill. Yet they would have us believe that like Coke and Pepsi, the difference between themselves and those across the aisle is night and day.

I call politics the most exaggerated example, less because one person's policies exactly replicates another, but more due to the lengths to which these people will go to distinguish themselves from others whose policies might differ slightly but which in the end support the status quo.

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